Chainlink (LINK) is retesting a crucial support zone amid the market pullback, leading some analysts to suggest that another significant drop may be coming if the current levels don’t hold.
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Chainlink Loses $25 Support
On Monday, Chainlink followed the rest of the market, dropping 10% to the local range lows. The cryptocurrency hit an eight-month high of $27.87 on Friday, but ultimately failed to hold this level, retracing to the $25.5-$26.5 area over the weekend.
LINK lost the recently reclaimed $25 support level, dropping to the $23.5 area in the afternoon. AltCryptoTalk noted that LINK has been trading within a rising channel for the past two weeks, explaining that the cryptocurrency remains within a crucial support zone despite the drop below $25.
To the market watcher, as long as LINK holds above the support zone’s lower boundary at $23.5, “the overall bias remains bullish, and we will be looking for trend-following long setups on every bearish correction.”
The analyst also highlighted that the Chainlink network is “secure, efficient, and decentralized,” which adds strength to its native token’s rally.
Notably, SBI Group, one of Japan’s largest financial conglomerates with $200 billion in total assets managed, partnered with Chainlink to “power several innovative use cases centered around tokenized funds, tokenized real-world assets such as real estate and bonds, regulated stablecoins, and more.”
In the Sunday announcement, the companies revealed that SBI Group and Japanese financial services companies will “leverage Chainlink services, including the Cross-Chain Interoperability Protocol (CCIP), SmartData (NAV), and Proof of Reserve to unlock secondary market liquidity and enhance the operational efficiency of tokenized assets” while ensuring privacy and compliance requirements.
Is A Drop To $20 Next?
Analyst Ali Martinez affirmed that Chainlink will test a key support level before a massive breakout. The market watcher highlighted a four-year symmetrical triangle formation on the altcoin’s chart, which targets a 280% increase once it breaks out.
LINK has retested the pattern’s upper boundary twice since the Q4 2024 rally, briefly breaking above the crucial resistance last week. As it failed to confirm the breakout, the analyst suggested that Chainlink will experience one more dip before aiming for the $95-$100 area.
Per the chart, this dip could target the next crucial support level around the $20 area, a 15% decline from current levels. Previously, analyst Rekt Capital noted that continued stability at the $23.86 level will be important, adding that a monthly close above this level is crucial for LINK’s rally.
Failing to reclaim this area in the monthly timeframe could lead to a deeper pullback toward the $19.41 level, not seen since the early August breakout.
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Meanwhile, Alex Clay affirmed that Chainlink “is the next ETH,” pointing out some similarities between the two charts. According to the analyst, both cryptocurrencies have been accumulating in a multi-year triangle formation, and LINK could follow Ethereum’s steps once it officially reclaims the pattern’s resistance.
Notably, after breaking out of this pattern last month, ETH confirmed the resistance as support and hit a new all-time high (ETH) last week.
As of this writing, LINK is trading at $23.52, a 8.5% drop in the weekly timeframe.
Featured Image from Unsplash.com, Chart from TradingView.com
